A Credit to an Asset Account Was Posted as a Credit

question 40

Multiple Choice

A credit to an asset account was posted as a credit to a liability account. This error would cause:

• A) assets to be understated.
• B) liabilities to be overstated.
• C) capital to be understated.
• D) None of the above is correct.

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Definitions:

Employee Wages

Payment given to workers for their services, usually determined by the hour, day, or work completed.

Net Income

The amount of money remaining after all operating expenses, taxes, and interest have been subtracted from total revenue.

Adjusting Entries

Journal entries made at the end of an accounting period to allocate income and expenditure to the period in which they actually occurred.

Liability and Asset Accounts

Accounts on a balance sheet that represent obligations to pay others (liabilities) and resources owned by a company (assets).